The action was a bit all over the place this week as some coins tried to take advantage of the Big Bitcoin move while others suffered hard after traders sold off some Alts in favor of Bitcoin. Bitcoin putting in a 12% move on the week is very impressive but it still wasn’t enough to retest the newly minted ATH near $65K.
The Correlation Matrix gives us a glimpse into what is coupled and what has decoupled from Bitcoin. The Strongest Alt to correlate with Bitcoin in the T-30 mixup would be XRP and LTC and they are sitting at a 0.65 correlation.
The least correlated to Bitcoin over the last 7 days was OMG. Understanding correlation can help you make trading decisions, especially when looking to hedge.
Daily Bitcoin Volume
On Friday we saw over 25K Bitcoins being traded in a single 24-Hour period. Quick math would tell us that somewhere around $1.5B worth of Bitcoin was moving around on Coinbase ALONE. Of the last 6 weeks, 5 of those weeks had a day with over 25K in Bitcoin Volume, three of them were on downward candles.
The overall average remains more or less flat and only three days last week were able to trade above the 30-Day Average. Stability is great but not when we are approaching very important or historic levels.
Bitcoin Dominance was able to Break above the resistance trend that it failed on at the beginning of the week. The breakout was clean and Dominance was able to retest the Support level twice before starting to move on again tonight.
It will take a move of a little over 8% to reach the dreaded 50% Resistance level. While dominance is moving upward, we expect to see a climb in the value of Bitcoin at the same time, however, Bitcoin does not have far to go to test its ATH and there could be some heavy resistance in that area.
If there is no resistance to be found then we should see the price in Bitcoin rise while the Dominance does as well. This will likely be a bad situation for the AltCoins.
Bitcoin CME Futures
The Gap from $59,900 – $61,980 has been completely filled thanks to the single candle last Friday. The Gap created at the open of this week was almost instantly filled as well.
For the first time in a very long time, we have no Overhead Gaps to fill. That means the next closest Gap is a downward Gap that would be filled with a move down to $32,270 (almost a 50% move down from our current location.
Bitcoin Weekly S/R
The Weekly level at 60K was cleanly broken last week and that marks three bullish weeks in a row and each week giving very little back on the downward wick. The Support area between 51-53K went untested and that can be a reason for caution. The 60K level should get tested so don’t be shocked if we see a 2K move to the downside to getting that out of the way,
A Hold at 60K then continues the story for continuation while a failure at 60K would open the playbook up for a Weekly Fakeout at the 60K mark.
Bitcoin is driving with the cruise control fully engaged. This week we saw the all but certain approval of an actual Bitcoin ETF, we heard the announcement from Coinbase about their NFT Marketplace which was preceded by the same announcement from FTX.US.
In College Football they oftwn say that a team “Controls Their Destiny”, especially when walking into the halfway mark undefeated at 6 or 7 wins. Bitcoin is in the same boat at the moment. Bitcoin can, with the help of everyone, smash its ATH and go on to create a much bigger one. That dream has to be shared by everyone tho, for anyone who hits the sell button instead of the Buy Button is ultimately not riding that train into the dream world.
In the past we have seen insanely Bullish news tank a market only to find out months later it was completely coordinated and manipulated so that the liars who tell you they hate Bitcoin could jump in on the fun at a lower price tag. With the ability to settle futures contracts in Bitcoin as opposed to cash, this should technically add the most buying pressure we’ve ever seen on Bitcoin and with the inflationary token spitting out a new Bitcoin at a slow rate, this begs the question – What Will Happen Next?
As always – Time Will Tell – but this should be an extremely volatile week ahead of us.